India’s banking system is getting a major clean-up from February 1, 2026. Under new directions issued by the Reserve Bank of India (RBI), banks across the country will start closing certain bank accounts that have remained unused for a long time. These include inactive accounts, dormant accounts, and zero-balance accounts that show no real activity. The move is meant to reduce fraud, lower banking costs, and make the financial system more secure and efficient.
Over the years, millions of people opened bank accounts for salaries, government schemes, one-time benefits, or promotional offers. Many of these accounts were later forgotten. According to banks, such unused accounts are not harmless. They increase operational burden and are often misused for illegal activities. RBI’s new framework aims to ensure that bank accounts are actively used and properly monitored.
Why RBI is cracking down on inactive bank accounts now
The main reason behind this move is the massive rise in inactive and dormant accounts over the past decade. Schemes like Jan Dhan Yojana made it easy to open accounts, but many users never continued regular transactions. Banks have repeatedly warned that dormant accounts are easy targets for cyber fraud, identity misuse, and money mule operations.
RBI has also studied global banking practices. Countries like the UK and Australia regularly shut down long-unused accounts to reduce systemic risk. Indian regulators now want to apply the same discipline. The February 2026 deadline makes it clear that banks are expected to act, not just issue reminders.
What RBI considers inactive and dormant accounts
As per RBI rules, a bank account becomes inactive if there is no customer-initiated transaction for 12 consecutive months. This includes no deposits, withdrawals, UPI payments, or fund transfers. Even logging into internet banking does not count unless money is moved.
If this inactivity continues for 24 months, the account is labeled dormant. Under the 2026 rules, dormant accounts that remain unused despite warnings and alerts may be closed. RBI has clearly stated that automatic entries like interest credits or bank charges do not count as activity, a detail many customers overlook.
The three types of accounts most likely to be closed
The first category includes inactive accounts that cross the one-year inactivity mark and show no sign of revival. The second category consists of dormant accounts that have been untouched for two full years. The third category is zero-balance accounts that were opened but never actually used, often during large-scale account-opening drives.
Accounts that actively receive government benefits like pensions or subsidies are generally safe as long as transactions continue. However, zero-balance accounts with no deposits, withdrawals, or transfers are at high risk. Banks say maintaining such accounts adds cost without providing value to customers or the system.
What happens to your money if your account is closed
Many people worry that they might lose their money if an account is shut down. RBI rules clearly protect depositors. Any remaining balance in a closed account is transferred to the Depositor Education and Awareness (DEA) Fund maintained by RBI. The money stays safe and can be claimed anytime by the account holder or legal heirs.
However, claiming money from the DEA Fund is not instant. The process requires identity verification, account details, and full KYC, usually through the original bank branch. Also, once the money moves to the DEA Fund, it does not earn interest. Experts say it is far easier to keep accounts active than to recover funds years later.
How this may affect senior citizens and rural customers
The impact of these rules will vary. Urban customers with multiple digital accounts may simply close unused ones or merge accounts. But senior citizens, migrant workers, and rural users who make infrequent transactions could face problems if they miss alerts or bank messages.
RBI has instructed banks to make extra efforts to contact such customers before closing accounts. Even a small transaction once a year, such as a UPI transfer or ATM withdrawal, is enough to keep an account active. Consumer groups have urged banks to spread awareness in local languages to avoid confusion and panic.
What banking experts say about the new rules
Most banking experts see this as a positive and necessary reform. Inactive accounts make fraud detection harder and distort customer data. According to banking consultants, cleaning up unused accounts will help banks deploy better AI-based fraud monitoring and improve customer service.
Experts also believe RBI may tighten rules further in the future by linking inactivity checks with digital identity systems. Banks are likely to push customers toward account consolidation and better nominee registration. While some critics feel the rules are strict, the long-term outcome is expected to be a safer and more transparent banking environment.
What account holders should do before February 2026
Customers should review all bank accounts they own and identify any that are unused. Making even one genuine transaction can reset the inactivity clock. Updating KYC details, mobile numbers, and email IDs is also important to ensure bank alerts are received on time.
If an account is no longer needed, it may be better to close it voluntarily instead of waiting for automatic closure. This avoids future complications and ensures full control over remaining funds.
Disclaimer
This article is written for general informational purposes only and is based on current RBI guidelines, banking practices, and publicly available information. Actual account closure procedures, timelines, and exceptions may vary from bank to bank. Readers are advised to contact their respective banks directly for official notices and personalized guidance. This content does not constitute legal, financial, or investment advice. Always verify details through official banking channels before taking action.